The hobbit turns into two hobbits in 3D!

Two Hobbit movies are officially becoming three as Peter Jackson and his many Hollywood backers have finalized plans to produce a third movie based on the fantasy book and release it in summer 2014.

Talks had been going on for the last several weeks between Warner Bros.’ New Line Cinema, Metro-Goldwyn-Mayer, various rights holders, and the principal cast after it became clear that director Jackson wanted to produce three films rather than the planned two.

The cast will include many actors from Jackson’s successful The Lord of the Rings films, including Martin Freeman, Richard Armitage, Ian McKellen, Cate Blanchett, and Elijah Wood.

New Line and MGM are said to have been eager to secure the participation of all who were needed, as the additional movie could generate significantly more revenue without a huge increase in costs.

In a post on his Facebook page, Jackson said the decision started after he and writing/producing partners Fran Walsh and Philippa Boyens watched an early cut of the planned December 2012 release The Hobbit: An Unexpected Journey.

“We know how much of the story of Bilbo Baggins, the Wizard Gandalf, the Dwarves of Erebor, the rise of the Necromancer, and the Battle of Dol Guldur will remain untold if we do not take this chance,” he wrote. “The richness of the story of The Hobbit, as well as some of the related material in the appendices of The Lord of the Rings, allows us to tell the full story of the adventures of Bilbo Baggins and the part he played in the sometimes dangerous, but at all times exciting, history of Middle-earth.”

Once it became clear to New Line and MGM executives several weeks ago that Jackson wanted to make the third movie, one of the trickiest parts was signing new deals with cast members, who were in a strong negotiating position since the studios would need them to appear in it.

It’s not yet clear how the material from The Hobbit and the Lord of the Rings appendices, which Jackson is also adapting, will be divided among the three movies. In addition, the filmmaker and studios will need to determine how much additional footage is needed and how much already shot will simply be spread out more than originally planned.

Jackson finished principal photography on The Hobbit movies in New Zealand this month and is in the midst of a planned four weeks of additional shooting there.

The summer release date for the untitled third Hobbit movie may come as a surprise to some, as the first two films are planned as December 2012 and 2013 releases. All three of Jackson’s Lord of the Rings movies were also released that month.

The Hobbit is a prelude to The Lord of the Rings, taking place 60 years before the events of those three volumes and films.